Alan Whitehead: Indeed. The DCC was established in a deliberate way. In effect, there was an auction to decide who would run the DCC after it was set up and it was put into the realm of Capita, so the established DCC is a subsidiary of that company. However, if a future Government thought that it was a particularly bad idea for the DCC to be a subsidiary of Capita, or any other company, they might decide that it was worth enduring the hiatus in the roll-out in order to recast how the DCC operates. It is not beyond consideration that such a Government might think, “The easiest way to do this is by taking the licensable activities away from the DCC as it stands”—in its present arrangement—“and introducing new licensing arrangements.” Having done that under clause 1, to establish a DCC that would not be a subsidiary of Capita, there might be a different arrangement.
Some Members might think that that Government would be a pretty misguided, and possibly fairly reckless, in putting the roll-out in jeopardy. But the fact that I  have set out a scenario in which a Government, acting on a reasonable and rational consideration, might do that—whether or not one thinks it is a reasonable  thing to do—indicates that one could easily envisage circumstances, contrary to what the Minister says, in which the power accorded by clause 1 could be implemented for purposes that we might not think would be helpful to the roll-out of smart meters but could easily be undertaken. Therefore, although that scenario is not very likely, having a line in the legislation to prevent it from happening seems to me a prudent way to proceed.
I have not heard from the Minister why that would not be a prudent way to proceed, why it could not be done or why it would in some way jeopardise the integrity of the Bill or have—as I appreciate some amendments do on occasions—equal and opposite effects elsewhere in the Bill that would make the amendment inappropriate. I have not heard an example of anything in the amendment that is non-executable in the Bill. The amendment appears to be in good order, and if we believe that to be the case, the only judgment we should make is whether it adds something to the Bill. In my opinion it does. I cannot really see why it should not be accepted for that reason. It is not a matter of party animus or oppositionism; it is about whether the Bill should be strengthened as has been suggested.
I cannot help thinking that, if the amendment is not accepted, there must be deeper reasons that the Minister has not articulated this morning. I am willing to hear about those other reasons, if there are any, but certainly in this debate, unless a deeper reason is about to arrive, I have not heard exactly what that reason might be.

Richard Harrington: I was going to thank the hon. Gentleman for giving way, but I will not now. I am grateful that I am not abusing the system, which I was going to.
I think we have to agree to disagree on this point, because I believe that, given the restrictions in the Bill and everything else, it is a minor point. I accept that the hon. Gentleman is not doing it to bring down the Government or anything like that, because opposition is opposition. I respect him not just for his position but, much more than that, for the person he is. If he wishes to press the amendment to a vote, then I understand that I have not persuaded him. If he wishes me to ponder the matter further, or even to meet him and talk about it, I am perfectly prepared to do so. I think it is making a mountain out of a molehill.
He thinks changing the licensable activity is quite an important thing that needs to be brought before Parliament. Any decision to remove a licensable activity would still be subject to parliamentary scrutiny through the affirmative  procedure, but it is ultimately a question of what discretion a Secretary of State should have in the consumer’s interest. We could politely agree to disagree on that, but if the hon. Gentleman would like to discuss this further and withdraw his amendment for that purpose, I would respect both things. At the moment, I disagree with him not because we are the Government and he is the Opposition, but because I do not see the significance of the points he is making.

Alan Whitehead: This is not a cosmically important thing, and I agree with the Minister that it is unlikely to change the course of the roll-out, but I say gently that that is not necessarily what we are supposed to do in Committee. We are not supposed just to grade the importance of the things in the Bill and then decide to act on them according to their relative importance; we are supposed to examine the Bill line by line and, between us, suggest ways that it can be strengthened so that it is as good as we can make it when it returns on Report and Third Reading. That means that things may be added to the Bill that are not in themselves important but could be regarded, in the context of the work we are supposed to do in Committee, as a result of us discharging our responsibilities properly.
I am in a bit of a dilemma. I agree with the Minister that this is not a really important thing, but I cannot see for the life of me why it cannot be placed in the Bill so that at the end of its passage it is as good as we, between us, can make it and that it contains things that, although they may not be that important, add to its overall strength. I simply have not heard any reason why that cannot be done. I have heard reasons why the amendment is not that important. The Minister might suggest—and he might be right—that if we put it to a vote we would over-emphasise its importance. However, I am—“annoyed” is not quite the right word—a little concerned that something that can be seen as reasonably obvious, if not as significantly strengthening the Bill, regardless of our party positions or of the position we take on the Bill overall, is rejected in this way. For that reason, I seek to divide the Committee.

Richard Harrington: The new clause would make it a condition of primary powers being extended that the Secretary of State carry out a review of smart meter roll-out, and that the review cover the data access and privacy issues, the benefits realised during the roll-out and the scope for greater benefits to be realised, and the effectiveness of the policy framework for future smart metering operations. I will now turn to each area that it is suggested be covered in the review in turn.
In 2012, the Government established a data access and privacy framework to ensure consumers’ interests are protected. This framework applies to domestic consumers and micro-businesses. It seeks to strike a balance so that consumer privacy is protected while enabling the proportionate access to data necessary to deliver energy system-wide benefits. For example, the framework determines the level of access that energy suppliers, networks and authorised third parties can have to energy consumption data. It also establishes the purpose for which data can be collected and the choices that consumers have about that. The central principle is that consumers have control over who can access their detailed energy consumption information, except when it is required for regulated purposes, a good example of which is billing.
The framework was welcomed when it was established, and the Information Commissioner’s Office, which is the data protection regulator, commented that it felt the framework offered a good level of control and protection for consumers. We publicly committed to carrying out a review of the framework, and intend to do that in 2018. Subject to the extension of the relevant powers, we will then be able to act quickly if there is any evidence that the framework is not delivering against its objectives.
On the second area, the Government are focused on the delivery of benefits and have regularly updated the cost-benefit analysis for the smart metering programme to reflect the latest available evidence. We are also very keen to ensure that even greater benefits can be achieved than forecast. For example, that is why we published our clean growth strategy and made a commitment in it to undertake further research and to trial approaches to using the data from smart meters to provide tailored post-installation energy efficiency advice on heating—the largest part of domestic energy bills—so that consumers will be able to make further changes to reduce consumption while maintaining comfort levels. That will further increase benefits.
We are looking at innovations that build on the smart metering infrastructure more widely, for example through the use of consumer access devices, which will enable greater home automation. I think that that is critical for  the future and know that hon. Members on both sides of the Committee will agree—the nirvana is everybody having an app on their phones, knowing exactly what is going on in their house or flat and being able to adjust accordingly their patterns of usage, not just of heating but when they want to put on a washing machine or any other device, to save electricity. In fact, that may be done automatically in the future through algorithms and things that I could not possibly understand how they work, but know will transform people’s lives. As we know, the whole smart meter system is to provide the building blocks for that to happen.
In terms of policy framework, the third area that was suggested for review, we have made a public commitment to undertake a post-implementation review of the smart metering programme, drawing on evidence from the roll-out itself and a period after its completion during which smart metering systems will have been operating in steady state. The review will evaluate the overall programme, the realisation of the benefits and the overall effectiveness of the policy and regulatory framework.
In summary the Government agree—I agree—with the sentiment of the proposed new clause. I hope that my response shows that we are planning actively to review the framework next year; we are focused on the realisation of current benefits and we intend to carry out a post-implementation review in 2021. However, I do accept the shadow Minister’s point. There is value in routinely taking stock of progress while this continues. With that in mind, if it is acceptable to the hon. Member for Southampton, Test—I know my previous suggestion on the previous amendment was not, but on this new clause I hope that he will accept that I have thought about what he wants—I will undertake to include as part of the smart meter implementation programme an annual report to go through progress in these areas formally. We would obviously make copies of that report available to both Houses.
Taking a step back to look at clause 1, I want to consider it as a whole. I have considered all the points mentioned on previous days in Committee. It is probably too early in the morning—I do not want to exercise the patience of Committee members—to continue, but I have thought a lot about the meter asset providers, the extension of powers and all those points. I hope that when we continue our discussions on those points, formally or informally, the hon. Gentleman will accept the fact that we have considered all of them in the Bill. Although I have not accepted some of his amendments, I have accepted their spirit, because our goal is a self-sustaining system, governed and operated by industry, with full oversight by Ofgem, delivering benefits to consumers.
I know, having heard the oral evidence—I had heard many of the participants before—a lot more work is needed to ensure the roll-out is a success. The Government have a critical role in continuing to lead the programme, during and immediately after the roll-out, to ensure that benefits are delivered, while informing Parliament, as I have explained.
I hope that given my commitment to report progress on those areas as part of our annual report, the hon. Gentleman will feel able to withdraw new clause 4. I commend clause 1 to stand part of the Bill.

Patricia Gibson: I want briefly to add my voice and that of my party on new clause 4. I know that the Minister will agree that we need continually to reassure consumers that their data are securely and robustly protected in the course of this roll-out. I know that he will agree how important it is to ensure that meters currently installed are always to the highest specification of function and data security.
The Minister will also be concerned—like, I am sure, everybody else in the room—about the evidence that was taken that smart meter network is being installed before its requirements as an internet-connected energy system had been fully determined. We would expect—I know that the Minister will feel this—that the Minister would do everything in his power to ensure that consumers are best protected amid this roll-out.

Alan Whitehead: We have talked about the extension period; the second part of the Bill is about administration orders. These might be made in the context of the DCC’s failure to operate either because it has gone bankrupt or because its supply of funds dries up or is diluted for any reason and it can no longer continue—it is entirely dependent on the resources it receives from suppliers to operate. A number of clauses in the Bill relate to setting up a procedure to enable the roll-out to continue by recovering the DCC’s procedures, if and when in administration, in such a way that the flow of the roll-out is not interrupted. At this stage of the legislation, therefore, we need to concentrate on whether the things put forward—what can and should be done by Government to make that change while at the same time continuing with the roll-out in the unlikely event of administration—are good enough to ensure the roll-out continues and we achieve the purpose of ensuring a smooth passage.
I want to make two brief points, to which the Minister may want to respond. The first is about provisions in the Bill relating to what are unlikely events that probably won’t not happen, but conceivably could. It might be prudent to legislate to ensure that we are in a position to do something in the unlikely event of that happening. We had a debate about that recently in this Committee. What we are doing in considering the second part of the legislation is roughly what we were doing in the first part to try and strengthen the Bill. We did not succeed in doing that, but we will not be churlish or childish about that. We will go along with the idea that this is an unlikely event, for which we have to make prudent legislation to ensure that catastrophe does not take place as far as the roll-out is concerned.
The second point is that we are legislating this morning for an event that could occur to an organisation that has been in operation for several years already without this legislation being on the statute book. One might ask, therefore, what was happening in the meantime. Were we operating over a period of time where there was  no protection for the smart meter roll-out programme from the possible bankruptcy or administration of the organisation that was essential to the running of the whole operation? That seems to me to be a considerable omission on the Government’s part.

Order. I ask for interventions to be brief if possible. Secondly, before the hon. Member for Birmingham, Selly Oak responds to that intervention, I am not sure whether this is the appropriate place to have this debate. We will be discussing the cost-benefit analysis issue in later clauses, and this amendment is about the objective of the smart meter communication licensee administration. Please can we try to have a narrowly focussed debate about the amendment before us, not a general debate that we can have later?

Alan Whitehead: I beg to move amendment 14, in clause3,page3,line32,at end insert “within the context of the full services offered by the DCC”.
This amendment requires that any regulations about prioritisation of activities following the DCC going into administration would have to take into account the context of the full services offered by the DCC.
The amendment refers to clause 3(6), which enables the Secretary of State to make regulations specifying the activities to be undertaken in a smart meter communication licence under administration, subsequent to the DCC having been placed in that administration. The circumstances set out in subsection (6) are essentially about the extent to which the Secretary of State may say to the administrator, “You are now in the position of administrating this failed company. Because of the arrangements necessary for the roll-out of smart meters, you should make sure that, at the very least, the minimum amount of activities are carried out to enable a smooth roll-out of smart meter services.”
As far as I understand it, the reason for the subsection is that as the DCC evolves it will undertake the initial core services provided in respect of the roll-out, but it may also undertake a number of additional elective services to facilitate the roll-out. It is those additional elective services that the Department mentions in the memorandum it placed in front of the regulatory Committee, stating:
“In the unlikely event that the DCC becomes insolvent, it may be necessary to prioritise certain activities of the DCC…We are not yet in a position to set out the prioritisation of the DCC’s services, so soon after the start of live services…and in advance of the development of elective services. We believe that this will be possible ahead of the completion of the rollout when demand from suppliers for DCC to provide other services could be expected to have materialised.”
The Department then states:
“Once we have determined the prioritisation and how it should be done, we would prepare a statutory instrument that would be subject to annulment in pursuance of a resolution of either House of Parliament.”
I will come to that particular point in a moment.
The point of those particular passages, concerning clause 3(6), is that the Department is not clear what the prioritisation of the DCC services might be under administration, because the Department is not yet clear, so close to the start of live services, what range of services it would face under administration—because those services have not yet fully emerged. The Department would therefore want to determine how the prioritisation  should be done, and to prepare a further statutory instrument, which would give form to that prioritisation once that is clear.
That is all very reasonable, except that something does not appear in 3(6) as it stands, or within the policy intent section that the Department has put forward as far as the regulatory Committee is concerned: any provision requiring that the services that the administrated DCC carries out at that point be as close as possible to the full range of services that were there before. It is distinctly possible for the Secretary of State to make regulations that would, for example, remove all elective services that had been developed by the DCC and concentrate just on the core services—the minimum that would enable the roll-out to limp home under the terms of administration.
The amendment seeks to give a context for what the Secretary of State may do by regulation, as far as administration is concerned, and it states that that context should be the full services offered by the DCC. Obviously, those would be the full services offered by the DCC at the point it went into administration, including those elective services which we do not fully know about at the moment. Clearly, if the DCC, prior to its administration, had developed a wider palette of services than the very minimum, it would have done so for particular reasons. I imagine that those reasons would be to assist the roll-out. Therefore, as a desideratum, under the terms of the administration, the DCC should operate post-administration as closely as possible to how it operated prior to administration.
The Secretary of State should consider, under those circumstances, what might be impossible or very difficult to achieve under a process of administration, not a wish for various services to be discontinued or downgraded. Obviously, I imagine that the Secretary of State would want to make sure that the future regulation was indeed as close as possible to what the DCC was doing prior to when it went into administration, but I would suggest that is not entirely the point. It is necessary to put in the Bill a framework for what the Secretary of State may do under regulation, and that should be to have serious regard of the services in place prior to administration and not to be tempted, as it were, to put forward regulations or give instructions subject to regulation that did not produce an outcome post-administration that was as good as it had been pre-administration.

Alan Whitehead: I beg to move amendment 20, in clause3, page3,line33,leave out subsection (7) and insert—
‘(7) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”
This amendment would apply the affirmative procedure to regulations under Clause 3.
This is the bad bit of clause 3. As stated before, the clause envisages the Minister making regulations to determine which of the DCC’s services should be prioritised to continue after administration. We have already agreed that those services should, in principle, be as close as possible to what they were prior to administration.
The Minister has responsibility under subsections (6) and (7) not only to make provision about how the smart meter communication administrator gives priority to specified activities but to produce a statutory instrument to that effect. It is envisaged that the negative procedure would apply to the statutory instrument. Subsection (7) states that the instrument is
“subject to annulment in pursuance of a resolution of either House of Parliament.”
That means that the statutory instrument could be prayed against and annulled if a negative resolution is placed before the House. If no one objects to the instrument, it goes through.
I set out in a previous Bill Committee why, in general terms, adopting important regulations by negative means is a bad idea. It is important that the House has proper sight of regulations and a proper opportunity to debate them and decide on them. As I am sure hon. Members know, the negative resolution procedure is a source of considerable dissatisfaction in the House. Under the negative resolution procedure, if we wish to proceed subject to annulment, as the legislation suggests, we have to enter a prayer against the instrument, which is in the form of an early day motion which suggests that it should be annulled; that it has been noticed, and we do not like it—or at least want to have it debated.
The prayer itself does not stop the passage of the negative resolution in the House. Indeed, there have been occasions when a negative resolution has gone into law and a number of months later it turns out that it is debated in Committee. The time lapse is sometimes because—not to put too fine a point on it—the Whips on the Government side have not conceded that there should be a time-slot available for a debate on that resolution. A prayer is essentially asking, “Please can we have a debate to annul this resolution?”
It is essentially in the gift, in this instance, of the Government Whips, to make time available for that to take place. It is not necessarily going to take place within the period of objection or even within a reasonable period after the objection has been made. So there are circumstances in which, before any light is shed on the negative resolution in the House, that resolution has been in force for quite a period of time. The debate that then takes place in the House is merely an observation on that negative resolution. It is not clear in House procedure whether even a vote for annulment at that point actually annuls that resolution, because it has already been enforced and is in operation.
Negative procedure should be used to place an instrument on the statute book only where the subject is purely technical in content and has no policy implications or wider concerns. In this instance, from the debate we have already had this morning, I suggest that regulations would do rather more than operate in only a very technical set of circumstances. There would be possible policy implications. As the Minister said this morning, Members would want to see that the Government’s intentions for the operation of the DCC had been carried out in regulations and would probably want to have a say on those regulations. An affirmative procedure seems to be absolutely the right way to do that.
I remain generally concerned about the extent to which legislation going through the House seems to allow for such negative resolutions. I am afraid that this looks like another instance of that. It is not necessary for the proper passage of a regulation through the House. What the Government want to do to make sure that the regulations work could be perfectly well achieved by a positive procedure; it would not hold it up, it would simply mean that it had to have some light shone on it and would be properly debated in Committee before it proceeded. For that reason, I suggest that it should be subject to the affirmative procedure, and that is what the amendment seeks to do.

Richard Harrington: Thank you, Mr Gapes. I am sure Opposition and Government alike will take your warning on a Division. I hope it is not necessary because I hope to explain in the time allowed, as I have done with other amendments—some successfully and some less than successfully.
I can see clearly that the purpose of this amendment would mean that in the unlikely event of insolvency—we all agree it is unlikely—any regulations that we will need to bring forward about the administrator’s priorities, which we have discussed before, would need to be approved by a resolution of both Houses. I can see the principle behind that, and it is a noble one, but I would argue that because of the speed required and the technical nature of these regulations, it is appropriate to use  the negative procedure, which the hon. Member for Southampton, Test does not like.
I made points in the debates on the previous amendments about the choices that the administrator has to make and the speed with which they have to make them. It is  considered reasonable—and I know the hon. Gentleman would agree—that the Government should guide the administrator in respect of this. That is why we are asking for these powers, so that the Secretary of State can make regulations specifying which activities carried out by DCC must be prioritised by the administrator and how this should be done. The question boils down to the nature of these provisions, which I argue are technical and therefore suitable for this kind of procedure.
The DCC has core services that provide energy suppliers and others with around 110 service requests. Again, I would ask both Mr Gapes and the Committee to consider the practicality of the affirmative system. This covers a range of areas, for example the provision of pre-payment services, the management of security credentials, changes of supplier events, the technical configuration of devices, access to network—I could go on, there are 110 of them. It would be necessary to review these services and prioritise them against new services, which I have mentioned before and which may be offered.
I argue that the regulations made under clause 2 would be largely administrative and technical in nature, focused on the specifics of implementation and acting to narrow rather than add to policy scope, entirely to protect consumers’ interests. We need to act promptly to achieve this, so that the administrator has appropriate direction. I believe that the procedure proposed will provide Parliament with sufficient oversight for supporting this ambition. I hope, not just because of time constraints but because I think it is the right thing, that the hon. Gentleman will understand our concerns and agree to withdraw his amendment.